Improve investment climate

  • Commitment expressed at Investment Summit was laudable; now leaders must act

Mar 7, 2017-

The Nepal Investment Summit 2017 was a grand success. The event held in Kathmandu for the first time since the early 1990s saw the participation of around 775 delegates, including around 285 foreign investors, from over 20 countries.

The inaugural session of the summit saw leaders of three big political parties—the Nepali Congress, the CPN-UML and the CPN Maoist Centre—sharing the stage to state that despite ideological differences, they were on the same page about foreign investment. This set the tone for the two-day summit. The icing on the cake was the interest shown by 16 companies of seven countries, including Nepal, to plough a record $13.5 billion into different sectors. This commitment is more than half the country’s estimated gross domestic product of the last fiscal year.

Now, the government must convince interested investors to actually bring in the money. For this, all political parties must come together and support the government to frame investment-friendly policies and reduce the number of processes that foreign investors must go through in Nepal.

The country’s investment climate, despite 

government claims, is still not favourable for foreign investors. It takes three to 10 years for hydroelectric project developers to begin 

construction because of tiresome processes of acquiring different licences, conducting environmental impact assessments and pooling public and private land. Investors eyeing other sectors also have to make tiring rounds of government ministries, departments and offices to complete paperwork and acquire licences. Further, Nepal has failed to introduce a law to govern 

alternative investment, such as private equity and venture capital. These can play a crucial role in giving a lift to small and medium enterprises, which can create many jobs.

These hurdles have always restricted the inflow of foreign direct investment. In the last fiscal year, for instance, real flow of foreign direct investment in Nepal stood at Rs5.9 billion. This amount is a tiny drop considering that $44.20 billion in foreign direct investment was attracted by India in 2015.

A World Bank study says Nepal needs to invest up to $18 billion in energy, transport, telecommunications, and water and sanitation infrastructure by 2020 to remove binding constraints to economic growth. Without this money, Nepal may not be able to lay the groundwork to achieve the ambitious target of becoming a middle-income economy by 2030. It is now time for all the political leaders and the government to 

remember what they committed to at the Investment Summit and walk the talk to raise the inflow of foreign investment into the country.

Published: 07-03-2017 08:05

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